Record Spending: $14 Billion RI Budget Bill Approved by House - Despite Warning
GoLocalProv News Team
Record Spending: $14 Billion RI Budget Bill Approved by House - Despite Warning
The spending bill is now at all-time record levels -- nearly a 50% increase in spending in five years.
Democratic House leadership claims that the budget “commits funding toward addressing the housing crisis, supports business development and makes education funding more equitable while limiting the use of one-time revenue to one-time expenditures.”
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTThe budget bill now goes to the Senate, where the Finance Committee is expected to take it up on Tuesday at 3 PM.
“Our goal with this budget is to support Rhode Islanders’ needs while responsibly preparing for our future. Our top priority, of course, is addressing our housing crisis, and we have worked hard, in collaboration with Governor McKee and our colleagues in the Senate, to identify the most effective ways we can direct the funding we have toward solutions that will help create more affordable housing access,” said House Speaker K. Joseph Shekarchi (D-Dist. 23, Warwick).
While the House leadership celebrated the spending package, the Rhode Island Public Expenditure Council (RIPEC) has raised concerns about the growth of the size of the state budget.
“The governor’s FY 2024 budget appears to be the last of a series of flush state budgets fueled by enormous allocations of federal pandemic funding and very large general revenue surpluses,” said RIPEC President and CEO Michael DiBiase ten days ago.
RIPEC reports that FY 2024 also marks the beginning of more constrained revenues forecasted for the next several years.
“Policymakers have had a relatively easy time managing expenditures, but the state is now entering a period in which pandemic-related federal funding will be running out and state general revenue growth will be considerably more constrained,” said DiBiase. “Policymakers will need to avoid unsustainable spending commitments and be prepared to curtail the level of spending growth.”
The Chairman of the House Finance Committee, Marvin Abney (D-Dist. 73, Newport, Middletown) is also an announced candidate for the vacant first congressional district.
“This budget was carefully crafted so that our residents, particularly our most vulnerable, retain the supports and assistance that they and their families need, so that our businesses have the ability and opportunity to grow, and so that Rhode Island is situated to withstand a very possible financial downtown that will affect both our state and national economies. Responsible, compassionate and thoughtful decisions were made to create a budget that will benefit all Rhode Islanders and this budget positions the state to be as competitive as possible into the future,” said Abney.
GOP Support
GOP members also fell into line supporting the spending.
House Minority Leader Michael Chippendale offers the following statement on the FY24 budget said, “The Fiscal Year 2024 budget process in the House was different than previous years for the House Minority Caucus. When the governor released his budget in February, leadership in the House Minority worked collaboratively with leadership in the Majority to craft a better budget for Rhode Island citizens and small businesses.”
Shekarchi took credit for an additional $31 million to support housing development. That includes $21 million from State Fiscal Recovery funds for a new program that allows the Secretary of Housing to target projects, including $4 million for transit-oriented development and $4.3 million to be transferred to the Infrastructure Bank to support infrastructure necessary for housing development, such as road and utility connections.
The House also approved, subject to an annual $30 million cap, a Low Income Housing Tax Credit (LIHTC) program. The LIHTC program would provide a tax incentive for developers to expand subsidized housing options for low-income households.
States that make LIHTC investments "have been able to leverage additional federal resources and successfully close financing gaps needed to finalize development and start construction on new housing," claimed the Speaker's office in its budget release on Friday, adding that the new program "will award tax benefits to developers through a competitive process."
Increased Spending for Homeless and More Staff for Housing Czar
The House approved $45 million from State Fiscal Recovery funds to increase facility capacity for individuals experiencing homelessness, three times the current level. Along with the increased funding is a change that allows the money to be used for homelessness prevention and stabilization programs.
In addition, the House fully funded Housing Secretary Stefan Pryor’s request for 21 FTEs for the State Housing Department.
The House did not include a proposal submitted in the governor’s housing amendments authorizing eminent domain powers for the Department of Housing.
A last-minute amendment by the House approved Friday added $7 million for early childhood programs from unspent federal funds. This includes $3 million to preserve Head Start and Early Head Start seats and $4 million for a pilot program to expand eligibility for child care, at no cost, to certain childcare workers.
Also included is $35.6 million to suspend collection of the gross receipts tax on electricity and natural gas billed to consumers next winter; $18.3 million would benefit residential customers, and $17.3 million would provide relief to commercial customers.
The budget includes a $45 million expenditure on the life sciences sector. Funds would be used for the development of a wet lab incubator spaces and support grants, loans, business development and incubation services to grow this sector.
The budget also creates a new quasi-public entity to coordinate life science initiatives, which was a proposal introduced in separate legislation (2023-H 6426) by Shekarchi.
Retirees Get a Minor Boost
Currently, retired public employees in the state’s pension system receive Cost of Living Adjustments (COLAs) every four years. The budget does not change the amount retirees receive, but changes the distribution schedule so retirees receive smaller adjustments annually.
To "improve the health of the pension fund, the House added a new requirement that half of all general revenues received in excess of the adopted revenue estimates in the completed fiscal year be transferred to the Employees Retirement System," said the Speaker's office.
In addition, the budget requests the Rhode Island General Treasurer conduct a comprehensive review of the impact of the 2011 pension overhaul and different proposals to reform the system.
Education Spending - Change in Formula, Impact on Communities Unknown
The budget allocates $20 million above the governor’s request, with $5 million going to multi-language learners and $15 million going to special education.
The bill allocates $4 million to the governor’s Learn 365 RI program for after-school learning.
Hospital Bailout
The state’s hospitals will receive a $14 million appropriation of funds, $5 million of which will come from general revenue and $9 million of which will come from federal funds.
The bill includes $20 million from State Fiscal Recovery funds for a matching grant program that will help cities and towns fund local road, bridge and sidewalk repairs.
The budget will provide 15 additional employees for the Attorney General’s staff, including fully funding a new cold case unit, paid for by settlement funds.
And in anticipation of slowing economic growth in future years, the budget allocates an additional $55 million to a supplemental rainy day fund, and requires that half of all general revenues received in excess of the adopted revenue estimates in the completed fiscal year be transferred to it.
The budget reflects the May revenue estimate that was $61.2 million lower than projected last November.
This story was first published 6/9/23 8:18 PM